All about Administration Orders

If you've sought advice from a debt management or IVA company, make sure you've understood all the options available to you - and asked what the people providing the advice have to gain. In many circumstances, Administration Orders may be a good tool, but often, they aren't advised as the people giving you the advice have little to gain from them.

Yet administration orders offer an affordable way out of debt for people owing less than Ł5,000. They also get the creditors off your back, legally, but there are drawbacks.

An administration order is a court order which covers all your unsecured debts. This means you make one regular payment and the court distributes it for you to all your creditors. It may be an appropriate solution for you if you owe less than Ł5,000 and you've received a County Court Judgement against you.

Under the terms of an administration order your creditors are not allowed to take any kind of action against you once the order is in place - nor to demand money in any way. You only have to make one monthly payment - and that payment is based on what you can afford; usually over a three year period.

The downside is that the court charges you for this service and the fee may be anything up to 10% of your total debt. This amount will be taken before payments to your creditors are made and if you miss a payment the arrangement may not be valid.

Nevertheless, an administration order brings clarity and peace of mind to many people who were previously struggling to make payments and who may have been facing aggressive and/or unreasonable demands for payments from creditors. But remember, you can only apply for an order if you owe less than Ł5,000, have at least two different creditors, live in England or Wales and have a County Court Judgement against you.

If you think an administration order is the right solution, you have to apply directly to the court. You will need to complete form N92, which can be obtained from your local court office. You'll need to include all your debts - whether they are in your name only or not. The court will usually take payments directly from your wages - though you can specify that you do not wish to pay it this way.